Feature / The best medicine

At more than £11bn a year, the NHS drugs budget is a key focus for QIPP, but what can trusts do to cut the medicines bill? Seamus Ward hears how the Royal Liverpool and Broadgreen University Hospitals NHS Trust has approached the issue

NHS drugs spending is a key reason why the service has been challenged to make £20bn in QIPP (quality, innovation, productivity and prevention) savings. New, expensive drugs, which in turn fuel patient expectation, are put on the market, seemingly all the time, while existing medicines are in greater demand as we live longer.

Nationally, the departments of health are working to reduce prices through mechanisms such as the pharmaceutical price regulation scheme and its successor. The NHS in England spends about £11bn a year on drugs – around £3.3bn of which is in secondary care. But what can individual trusts or health economies do to make their drugs spending as lean as possible?

Royal Liverpool and Broadgreen University Hospitals NHS Trust has implemented some innovative initiatives. Pharmacy is a clinical support service and has a £4m annual budget for staff and non-staff costs. The pharmacy department is already efficient, says Alison Ewing, clinical director of pharmacy, claiming that the trust’s staffing is in the lower quartile of comparable trusts on staff costs.

Across the whole organisation, the drugs spend in 2010/11 was  £38m, largely made up of £21m in high-cost medicines excluded from payment by results (PBR) and £17m for those not excluded.

While each directorate has its own drugs budget, the pharmacy team has management input to the budgets and the clinical director has overall responsibility for the safe, effective and economical use of medicines.

‘The rise in drugs costs over the past 10 years has been astronomical, but our basic drugs budget for those included in PBR hasn’t gone up much,’ says Ms Ewing. ‘It’s high-cost drugs, particularly for cancer, some of the auto-immune diseases (such as rheumatoid arthritis) and age-related macular degeneration where costs are rising.

‘When it comes to QIPP, we ask: “Does it offer better quality and is it productive?”,’ she says. ‘But if it is expensive it must provide value for money. My medicines information team provides some good reporting around the value for money of new drugs, but year-on-year it is harder to get efficiencies.’

Outsourcing solution

Working together, the pharmacy and finance departments – alongside frontline clinicians – have taken steps to tackle the trust’s drugs bill. About six years ago, it looked at outsourcing its outpatient dispensing, which has an annual budget of about £11m, with the aim of improving the quality of the service to patients. Preliminary discussions were held with a local community pharmacy, but did not go any further. However, interest in the idea was renewed when a new Lloyds pharmacy opened next to the hospital.

The partners piloted the scheme for 12 months, initially focusing on the potential for outsourcing outpatient prescriptions from its haematology directorate. After receiving board approval, Ms Ewing’s department trained the Lloyds pharmacy staff and put in standard operating procedures. Many of the drugs involved in the pilot were low-volume, high-cost medicines, such as those for leukaemia.

‘Lloyds was able to turn around prescriptions in 10 to 12 minutes. In our pharmacy, with all the competing interests, such as clinical trials or calls for medicines from the wards, we could only turn round prescriptions in around 40 minutes. So, as you can imagine, the patients loved the new arrangements,’ Ms Ewing says.

Though the trust pays the pharmacy a management fee, it is proving cheaper and is improving the patient experience. Outsourcing has also reduced the VAT bill, as the tax does not apply to drugs dispensed in the community.

Ms Ewing adds: ‘We arranged for Lloyds to buy medicines at our contract prices. The drugs suppliers were a bit reticent at first, but Lloyds overcame this when it opened a “hospital” account with the companies.

‘Since the pharmacy had no NHS dispensing contract, the companies were reassured that the medicines would only be used for our hospital patients and not used for routine dispensing at NHS preferential prices.’ 

After six months, a survey showed that patients and staff supported the change, so the team went back to the board seeking its approval of a tender for outsourcing all outpatient prescriptions.

It was one of the first tenders of its kind, with Lloyds winning the contract and opening a unit alongside shops in the hospital concession area. It now fills all outpatient prescriptions, except those for clinical trials, extemporaneous products and ophthalmology.

A further patient survey, conducted a year into the new arrangements, was positive. ‘We have also generated significant savings for the health economy as a lot of the savings have been in expenditure on payment by results-excluded drugs,’ Ms Ewing says. ‘And when VAT went up, we didn’t charge the PCT any extra. It’s a good saving for the health economy.’

Royal Liverpool and Broadgreen chief executive Tony Bell says QIPP was at the heart of the outpatient project. ‘My drivers for change at the outset of this project were always clear – to improve the patient experience and reduce cost.  Both of these key QIPP objectives have been met and central to that has been innovation,’ he says.

Deputy director of finance Sheila Fowler adds: ‘The arrangements have freed up our dispensing staff time. We have agreed we won’t take the savings out of the pharmacy department’s budget and it will use the funds to enhance services on the wards.’

As a result, two pharmacy technicians have been moved to the wards, assessing whether the medicines that patients bring into hospital can still be used during their stay. This has reduced hospital prescribing, cut waste and saved an estimated £20,000 per ward, per year.

Discharge is quicker too. As the hospital dispensary no longer has to deal with outpatient prescriptions, it has been able to cut the time taken to produce discharge prescriptions in half.

‘It took a lot of hard work to make the outpatients project happen,’ says Ms Ewing. Negotiations were complex, and the partners had to sign up more than 50 suppliers.

Training of Lloyds’ staff was vital in making the scheme a success. ‘It’s a complex clinical situation – community pharmacies don’t normally deal with cancer or HIV drugs, for example,’ she adds.

There was also the potential to lose important data, such as medicines spending, the range of drugs dispensed and use of PBR-excluded drugs. ‘You could lose a lot of information if somebody else is providing drugs to your patients and we knew we had to make sure we got accurate, timely information back from them. We get the information back each month and, working with Lloyds we process it and generate invoices in time so we can send it to the PCT for reimbursement,’ Ms Ewing says.

The outsourcing initiative is not for all providers, she believes. ‘You have to be spending at least £2m a year on outpatient prescriptions to make it viable.’

Formulary initiative

Away from the outsourcing project, other measures have been taken. Like most other healthcare institutions, the trust’s pharmacy department worked with doctors and nurses to put together a formulary, which sets out medicines to be used to treat particular symptoms or conditions. It is overseen by the  medicines management group.

‘It ensures we get value for money and a lot of the work is done in conjunction with the finance department,’ Ms Ewing says.

Ms Fowler adds the medicines management group is symptomatic of the close working between the pharmacy and finance departments, clinicians and the wider health economy. The group, which includes a GP, a patient  and senior PCT representation, is  important as it looks for new drugs that will be available in the future, she says. This allows the trust and the local health economy to predict increases in drugs costs in a timely way.

The introduction of a drug can be significant. One example is infliximab, a monoclonal antibody and part of a group of drugs known as anti-TNF (tumour necrosis factor) – used to treat rheumatoid arthritis, Crohn’s disease and other auto-immune diseases. This group of drugs costs the trust up to £10m a year – about a quarter of total drugs spending.

An initiative that aimed to reduce the cost of erythropoietin, which is used to treat anaemia in patients with renal failure, is another example of the close work between finance and pharmacy professionals. Though initially there was just one, there are now several products on the market, so the different disciplines got together with the clinicians to settle on one product to be used throughout the trust.

This resulted in a 60% cost reduction on the the product. The saving is assigned to the renal department, which has given the pharmacy team funds to hire a technician. The technician works with renal patients to ensure that their medicines are appropriate and fit for use, and to reduce waste.

Automatic dispensing

The trust has invested in other areas to produce savings. About nine years ago, the trust spent £400,000 on an automatic dispensing system, which has freed staff time and improved accuracy.  ‘This has allowed us to put them on the wards to ensure patients get the right medicines, for the right purpose first time,’ Ms Ewing says.

Looking forward, Ms Ewing says the NHS faces the development of new drugs in many therapeutic areas. One of the biggest areas for development may be in monoclonal antibodies (these can be identified by those with a non-proprietary name ending in ‘mab’).

She says homecare may be next to offer the NHS savings on drugs spending. This is where hospital doctors decide a patient’s treatment does not need to be delivered in secondary care, though clinical management remains in secondary care.

Homecare is treated in the same way as community prescribing so there is no VAT, and it can be provided by one of several companies for a fee. She adds: ‘We completed a review of homecare in November and I believe that is where significant savings will be made in the next financial year.’

Ms Fowler adds that the trust hopes to get some financial recognition for its work. Savings made by the trust can have a knock-on effect in the community – for example, as a result of the discounts the trust negotiates on PBR excluded drugs.

‘We are discussing with PCTs ways of sharing QIPP savings because PCTs are getting a lot of benefit from what we are taking out,’ she says. ‘A group has been set up by the SHA to prepare a paper on having fair shares throughout the health economy. We would like it somewhere in the region of 50:50, not just in drugs but also on devices. If we can negotiate lower prices in pass through payments it benefits PCTs.’

Drugs costs are a major focus for QIPP, but work at trusts such as the Royal Liverpool demonstrates that savings can be made without reducing quality.